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Carney’s new cabinet and media interviews fail to provide clarity

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From the Fraser Institute

By Jason Clemens and Tegan Hill

Prime Minister Carney unveiled his new cabinet and did post-announcement media but failed to provide the clarity about his government’s actual views on resource development, particularly oil and natural gas. This uncertainty continues to impede private-sector investment, which our country badly needs.

Uncertainty is an investment killer because it makes it almost impossible for entrepreneurs, businesses and investors to reasonably weigh the risks, potential benefits and hurdles of a potential investment. A broadly recognized measure of uncertainty shows Canadian uncertainty at historic levels. The average monthly uncertainty measure between January 1985, when the data series began and December 2019 just before COVID was 135. The average for the first four months of 2025 was 1,300, almost 10 times higher.

An enormous part of that uncertainty relates to Trump’s tariffs, and the havoc they’re inflicting on entrepreneurs, investors and workers. But contradictions from the federal government in several key policy areas including government spending and borrowing, and energy policy are also creating uncertainty.

Unfortunately, Prime Minister Carney’s recent cabinet appointments and his subsequent media interviews failed to provide clarity.

Consider Tim Hodgson, the new Minister of Energy and Resources. He has a strong background in finance—CEO of Goldman Sachs Canada, chair of Ontario’s electric utility company Hydro One and investment board chair of the Ontario Teachers’ Pension Plan. The latter is important because he oversaw and approved investments in traditional energy companies such as Suncor and Canadian Natural Resources. Hodgson also has ties with the Alberta business community through his board appointments on several Calgary-based companies. His appointment has been interpreted by some that the Carney government will pursue policies to develop our oil and gas sector.

But the appointment of Julie Dabrusin as the Minister of the Environment and Climate Change signals the exact opposite. Dabrusin was the Parliamentary Secretary to the two previous Environment Ministers, Jonathan Wilkinson and Steven Guilbeault. Both opposed several pipeline developments, were instrumental in the introduction of a cap on emissions from the oil and gas sector, and other measures specifically designed to limit—if not actually decrease growth—in Canada’s traditional energy sector. A number of high-profile people in the energy patch, including Alberta Premier Danielle Smith, have already raised concerns about her appointment and what it means for energy development.

The appointments of Hodgson and Dabrusin continue the Carney government’s contradictory approach to policy, seemingly trying to be all things to all Canadians.

In a recent interview with CTV News, Prime Minister Carney simultaneously stated his support for new pipelines to deliver oil and gas to new markets but would not clarify if that meant revising or removing legislation that is broadly seen as a barrier to such developments. More specifically, during the campaign Carney said he would not eliminate Bill C-69, which covers how large infrastructure projects including pipelines are reviewed and approved. It’s widely agreed that Bill C-69 and its evaluation criteria make it almost impossible to build new pipelines in Canada.

Moreover, he failed to clarify whether he would eliminate the government’s current cap on emissions from the oil and gas sector, which is widely accepted as a cap on production. Indeed, according to the independent Parliamentary Budget Officer, the cap would result in less oil and gas production.

These glaring contradictions, which appear to be rooted in attempts to satisfy all Canadians and voting constituents, will need to be clarified at some point. There will come a time—whether it’s a budget (which apparently Canadians won’t see until next year), an application by a company to build a new pipeline, or perhaps just the continuing economic stagnation of the country—when the prime minister will be forced to make a clear choice. Until then, the cost of uncertainty will continue to impose real hardship on Canadians.

Jason Clemens

Executive Vice President, Fraser Institute

Tegan Hill

Director, Alberta Policy, Fraser Institute

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Five key issues—besides Trump’s tariffs—the Carney government should tackle

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From the Fraser Institute

By Jake Fuss and Grady Munro

On Tuesday in Ottawa, Prime Minister Mark Carney unveiled his new cabinet, consisting of 28 ministers and 10 secretaries of state. They have their work cut out for them. In addition to President Trump’s trade war, the Carney government must tackle several other critical issues that have persisted since long before Trump was re-elected.

First and foremost, the Carney government should address stagnant living standards for Canadians. From the beginning of 2016 to the end of 2024, per-person GDP—a broad measure of living standards—grew by only 2.5 per cent in Canada compared to 18.7 per cent in the United States (all figures adjusted for inflation). While U.S. tariffs threaten to further reduce living standards in Canada, the marked decline began almost a decade ago.

There’s a similar gloomy story in worker incomes as Canadians continue to fall further behind their American counterparts. According to the latest data, median employment earnings (in Canadian dollars) in all 10 provinces ranked lower than in every U.S. state in 2022—meaning Americans in low-earning states such as Mississippi ($42,430), Louisiana ($43,318) and Alabama ($43,982) typically earned higher incomes than Canadians in the highest-earning province of Alberta ($38,969).

Why is this happening?

Part of the problem is the state of federal finances. Even Prime Minister Carney has criticized the Trudeau government’s approach to spending increases and debt accumulation, which diverts taxpayer dollars away from programs and towards debt interest payments, and burdens younger generations with higher taxes in the future. But unfortunately, according to Carney’s election platform, his government plans to borrow $93.4 billion more over the next four years compared to the Trudeau government’s last spending plan. The prime minister and his new cabinet should rethink this approach before tabling their first budget.

The Carney government should also cut taxes. Canadians in every province face higher combined (federal and provincial) personal income tax (PIT) rates than Americans in virtually every U.S. state across a variety of income levels. Canada’s PIT rates are similarly uncompetitive compared to other advanced countries. High taxes impose a burden on families, but they also make it harder for Canada to attract and retain high-skilled workers (e.g. doctors, engineers), entrepreneurs and investment, which drives economic growth and prosperity.

Finally, the Carney government should meaningfully address Canada’s housing affordability crisis. Housing costs have risen dramatically due to a significant gap between the demand for houses and the supply of housing units. In 2024, construction began on 245,367 new housing units nationwide while the population grew by 951,717 people due in part to one of the highest levels of immigration in Canadian history. This problem has been growing for decades—housing starts per year have remained stuck at essentially the same level they were in the 1970s while annual population growth has more than tripled. If policymakers want to help lower housing costs, they must reduce the imbalance between population growth and housing starts.

For the federal government, that means aligning immigration targets more closely to housing supply and rethinking policies that increase housing demand such as homebuyer tax credits and First Home Savings Accounts. Meanwhile, provincial and local governments should reduce red tape and construction costs to increase supply.

The Carney government has its work cut out for it. Besides U.S. tariffs, Canadians face several critical issues, which have persisted long before Trump was re-elected, and will continue unless something changes.

Jake Fuss

Director, Fiscal Studies, Fraser Institute

Grady Munro

Policy Analyst, Fraser Institute
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Washington Got the Better of Elon Musk

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The tech tycoon’s Department of Government Efficiency was prevented from achieving its full reform agenda.

It seems that the postmodern world is a conspiracy against great men. Bureaucracy now favors the firm over the founder, and the culture views those who accumulate too much power with suspicion. The twentieth century taught us to fear such men rather than admire them.

Elon Musk—who has revolutionized payments, automobiles, robotics, rockets, communications, and artificial intelligence—may be the closest thing we have to a “great man” today. He is the nearest analogue to the robber barons of the last century or the space barons of science fiction. Yet even our most accomplished entrepreneur appears no match for the managerial bureaucracy of the American state.

Musk will step down from his position leading the Department of Government Efficiency at the end of May. At the outset, the tech tycoon was ebullient, promising that DOGE would reduce the budget deficit by $2 trillion, modernize Washington, and curb waste, fraud, and abuse. His marketing plan consisted of memes and social media posts. Indeed, the DOGE brand itself was an ironic blend of memes, Bitcoin, and Internet humor.

Three months later, however, Musk is chastened. Though DOGE succeeded in dismantling USAID, modernizing the federal retirement system, and improving the Treasury Department’s payment security, the initiative as a whole has fallen short. Savings, even by DOGE’s fallible math, will be closer to $100 billion than $2 trillion. Washington is marginally more efficient today than it was before DOGE began, but the department failed to overcome the general tendency of governmental inertia.

Musk’s marketing strategy ran into difficulties, too. His Internet-inflected language was too strange for the average citizen. And the Left, as it always does, countered proposed cuts with sob stories and personal narratives, paired with a coordinated character-assassination attempt portraying Musk as a greedy billionaire eager to eliminate essential services and children’s cancer research.

However meretricious these attacks were, they worked. Musk’s popularity has declined rapidly, and the terror campaign against Tesla drew blood: the company’s stock has slumped in 2025—down around 20 percent—and the board has demanded that Musk return to the helm.

But the deeper problem is that DOGE has always been a confused effort. It promised to cut the federal budget by roughly a third; deliver technocratic improvements to make government efficient; and eliminate waste, fraud, and abuse. As I warned last year, no viable path existed for DOGE to implement these reforms. Further, these promises distracted from what should have been the department’s primary purpose: an ideological purge.

Ironically, this was the one area where DOGE made major progress. In just a few months, the department managed to dismantle one of the most progressive federal agencies, USAID; defund left-wing NGOs, including cutting over $1 billion in grants from the Department of Education; and advance a theory of executive power that enabled the president to slash Washington’s DEI bureaucracy.

Musk also correctly identified the two keys to the kingdom: human resources and payments. DOGE terminated the employment of President Trump’s ideological opponents within the federal workforce and halted payments to the most corrupted institutions, setting the precedent for Trump to withhold funds from the Ivy League universities. At its best, DOGE functioned as a method of targeted de-wokification that forced some activist elements of the Left into recession—a much-needed program, though not exactly what was originally promised.

Ultimately, DOGE succeeded where it could and failed where it could not. Musk’s project expanded presidential power but did not fundamentally change the budget, which still requires congressional approval. Washington’s fiscal crisis is not, at its core, an efficiency problem; it’s a political one. When DOGE was first announced, many Republican congressmen cheered Musk on, declaring, “It’s time for DOGE!” But this was little more than an abdication of responsibility, shifting the burden—and ultimately the blame—onto Musk for Congress’s ongoing failure to take on the politically unpopular task of controlling spending.

With Musk heading back to his companies, it remains to be seen who, if anyone, will take up the mantle of budget reform in Congress. Unfortunately, the most likely outcome is that Republicans will revert to old habits: promising to balance the budget during campaign season and blowing it up as soon as the legislature convenes.

The end of Musk’s tenure at DOGE reminds us that Washington can get the best even of great men. The fight for fiscal restraint is not over, but the illusion that it can be won through efficiency and memes has been dispelled. Our fate lies in the hands of Congress—and that should make Americans pessimistic.

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